The Canadian dollar surged against the US dollar in today’s trading session after the Bank of Canada left interest rates unchanged and trade optimism embraced the markets. As of 3:30 p.m. London time, the Canadian dollar traded at 1.3234 against the US dollar, representing a daily change of 0.50%.
Reportedly, the US and China are moving closer to striking a phase-one trade deal before the December 15 tariff deadline, when additional tariffs on $160 billion of Chinese imports could be introduced.
Tensions over human-rights issues in Hong Kong and Xinjiang are unlikely to have an impact on reaching a deal, according to sources familiar with the talks.
Remaining issues in reaching a phase-one deal between the world’s two largest economies include how to guarantee US agricultural imports to China and which tariffs to roll back, the sources said.
The news sent shockwaves through the markets only one day after President Trump said he had no urgency of reaching a deal.
Higher risk appetite underpinned the price of Brent crude and put some downward pressure on the US dollar and the USD/CAD pair in today’s trade.
In Canada, the BoC held interest rates steady at 1.75% in today’s monetary policy meeting and said that the Bank’s October projection for the global economy appears to be intact.
Consumer spending expanded, supported by rising wages, and the housing market remained robust, according to the statement.
Another important market report came from the US. The ISM non-manufacturing PMI came in at 53.9 in November, missing market expectations of 54.5, but still reflecting a growing economic activity in the non-manufacturing sector for the 118th consecutive month.
The USD/CAD pair finally managed to break below its well-defined trading range on today’s plethora of market events, reaching an intraday low of 1.3219. To the downside, the November 19 low of 1.3190 represents the next potential target for sellers.